To address a failed mortgage credit check, first review your credit report for errors and dispute inaccuracies with the credit bureaus. If your score remains insufficient, consider paying down debts to reduce credit utilization, becoming a co-borrower with a stronger credit profile, or seeking alternative financing options like FHA loans. Contacting a credit counselor or financial advisor can also provide tailored strategies to improve creditworthiness.

This approach is effective because credit accuracy is critical for mortgage eligibility. A 2023 Federal Trade Commission (FTC) study found that 20% of consumers have at least one error on their credit reports, which can lead to loan denials. Disputing errors can increase approval chances by correcting misleading data, such as incorrect late payments or inflated debt balances. For example, a 2022 Equifax report noted that 68% of disputed items were resolved in favor of consumers, often within 30 days.

Debt management is key to improving scores, as high credit utilization (above 30%) directly impacts creditworthiness. Reducing balances by 10% can boost scores by 50–70 points within six months, per FICO research. Co-borrowers with strong credit can mitigate individual weaknesses, as lenders evaluate combined profiles. For instance, FHA loans allow co-borrowers to qualify even if one applicant has a lower score, provided the combined credit meets thresholds. Alternative financing options, such as private lenders or VA loans, may bypass strict credit criteria but often involve higher interest rates or stricter income requirements. Proactive steps to address credit issues and leverage alternative pathways significantly enhance mortgage approval outcomes.